Shareholders in Intel have sued the US government, challenging the Trump administration's demand for equity in exchange for grants made under the Chips Act. This lawsuit highlights concerns about the administration's "elastic interpretation of federal law to justify grabbing ownership in companies."

The administration has pursued approximately 30 deals in prominent companies like Intel and Westinghouse, as well as startups in critical sectors such as electron technology and rare earth minerals. The Department of Defense even established an "Economic Defense Unit" to execute deals potentially worth up to $200 billion.

However, the administration's legal ground is "shaky." While Congress has granted equity authority to specific agencies, the administration's justification for its broad equity deals relies on interpretations of the Defence Production Act and other supply chain resilience laws. These laws were intended to incentivize investment and boost production, not necessarily to grant the government shareholder status. The lack of transparency surrounding these deals is also a significant concern, raising risks of favoritism and wasted taxpayer dollars.

While the current approach is criticized, the underlying principle of government stakes in industries essential for national security is not inherently flawed. Congress has leverage, particularly with the upcoming reauthorization of the DPA by September 30, to define clear rules and guardrails for government equity investments, ensuring they support national defense without political patronage.